Working while on the age pension

Is it worth working while you are on the age pension?

The Work Bonus was introduced in 2009 to encourage those over Age Pension age to continue to work and to make it more financially beneficial for them to do so. It provides a concession for employment (and gainful work) Income for all pensioners after reaching Age Pension age

Any eligible age pensioner can earn up to $300 per fortnight without it being assessed as income under the pension income test. This means that for couples where both are working - both parties may have the first $300 per fortnight of their own employment income not counted. For those with irregular or seasonal income, unused portions of the Work Bonus can be banked up to a maximum amount.

This amount was previously $7,800, however, from 1 December 2022 to 31 December 2023, a one-off, temporary credit of $4,000 applies to Work Bonus income bank balances. The maximum income bank balance increases to $11,800 over this period.

Subject to the passage of legislation, from 1 January 2024 this temporary measure will be made permanent, resulting in all new pensioners over Age Pension age receiving a one-off $4,000 credit to their Work Bonus income bank.  The maximum income bank balance will also be permanently increased to $11,800.

The Work Bonus operates in addition to the pension income free area. From 1 July 2023, the pension income free area is $204 a fortnight for single pensioners, and for couples combined, it is $360 a fortnight. This means a single pensioner over Age Pension age with no other private income could earn up to $504 a fortnight from work and still receive the maximum rate of pension.

Income earned in excess of the relevant thresholds reduces the pension by $0.50 for single pensioners and $0.25 each for pensioner couples.

So is it worth working while on the age pension. The answer is - it depends!

The penalty of $0.50 in the $1.00 for income over the thresholds is onerous and substantially reduces the attractivenss of working. So if income is the only reason for working, than perhaps only work within the thresholds.

But if the income is not the only benefit of working, than you may be willing to wear this penalty.